An Analysis of Connecticut's Public Employee Retirement Plans

26 Pages Posted: 10 Aug 2020

See all articles by Andrew G. Biggs

Andrew G. Biggs

American Enterprise Institute

Tracy Miller

Mercatus Center at George Mason University

Date Written: August 5, 2020

Abstract

The state of Connecticut runs six defined benefit pension funds for its employees, which in the aggregate are among the most poorly funded retirement plans in the country and place increasing fiscal burdens on the state budget. We use a computer model to simulate the finances of these plans, demonstrating how sensitive the plans’ funded ratios and unfunded liabilities are to changes in assumed future investment returns. Future investment returns that are well within the reasonable distribution of outcomes could produce substantially greater unfunded liabilities than even those that currently are reported. This exercise demonstrates the need for greater attention to uncertain investment returns in government analyses and financial disclosures regarding public employee pensions plans.

Keywords: state and local budget and expenditures, retirement, state and local government, health, education, welfare, public pensions

JEL Classification: H76, H71, G23, H55, H75, J32

Suggested Citation

Biggs, Andrew G. and Miller, Tracy, An Analysis of Connecticut's Public Employee Retirement Plans (August 5, 2020). Mercatus Research Series, Available at SSRN: https://ssrn.com/abstract=3669408 or http://dx.doi.org/10.2139/ssrn.3669408

Andrew G. Biggs (Contact Author)

American Enterprise Institute ( email )

1150 17th Street N.W.
Washington, DC 20036
United States
202-862-5841 (Phone)

HOME PAGE: http://www.aei.org

Tracy Miller

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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